FREE ESSAY ON ECONOMIC PHILOSOPHIES

ECONOMIC PHILOSOPHIES

How much should we let the government interfere with our economy? Do we trust the
government to take on the enormous responsibility of caring for our economy? Our economy
is a precious thing and we must take great care of it, for it can make us powerful and
prosperous or it could be the demise of our nation. Three economists - Karl Marx, Adam
Smith, and John Maynard Keynes - all had opposing views on how much government
interference should be present upon the economy.
Karl Marx believes that the government should control the economy. This means that every
aspect of the economy is controlled directly by the government. Marx says that if the
government plays no part in the economy, then the economy will collapse, and there will
be a revolution of the working class. Karl Marx says that a wage-labor war will break
down society and cause a downfall of the economic structure. He feels that after the
revolution of the working class, each individual of society will hold an intricate part
of the economy. Everyone is the same and no one has any special abilities or talents.
Marx says that businesses will take fewer workers because when the businesses upgrade
their technology by replacing out-dated machines with newer ones, the machines will do
more work; therefore, it will allow for fewer people to do the same job.
Adam's idea of society is that each person can do whatever they want to advance
themselves and each person can pursue happiness in whatever fashion they believe to be
the best. Technology creates new and better ways to do things which allows society to
grow and become more advanced. Smith says that new technology creates new jobs by
expanding the limits of manufacturing and science. With new technology people can do
things they never could do or even imagine before. Adam Smith says that the government
should stay out of the economy all together. The economy is like a boat - it goes up and
down. Smith believed that the economy would fix itself; therefore, the government
shouldn't interfere with the economy. He said one has to have "faith" because the economy
will fix itself. Things may not be going great right now, but the economy will rise on
it's own. The result is graphically represented as a vertical aggregate supply curve.
John Maynard Keynes believed that it was necessary for the government to intervene in 
the economy. He felt the government played an essential part in maintaining the economy
and 
keep it from going into a depression. The Keynesian view sees the causes of unemployment
and 
inflation as the failure of certain fundamental economic decisions. Also, product prices
and wages 
are downwardly inflexible, meaning the significant declines in prices and wages will
occur only 
after extended and costly periods of recession or depression. Internal factors plus
external forces, 
such as wars and droughts, contribute to economic instability. John Maynard Keynes said:
The ideas of economists and political philosophers, both when they are right and when
they are wrong, are more powerful than is commonly understood. Indeed the world is ruled
by little else. Practical men, who believe themselves to be quite exempt from any
intellectual influences, are usually the slaves of some defunct economist.
The essence of extreme Keynesian is that product prices and wages are downwardly
inflexible over very long time periods. The result is graphically represented as a
horizontal aggregate supply curve. Keynes's view is that the economy is like an elevator
- goes up and down regularly, but it could stall.
There should not be total government control as in Marx's opinion nor should there be no
governmental influence as in Smith's opinion. The Great Depression was a desolate time
for the economy, and if it wasn't for the government spending money on World War II, we
may not be as prosperous as we are today. Keynes's view was the most correct because the
government should have some influence on the economy, but the government should step in
only when needed.
Bibliography
CZ